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Retailers Set to Increase Last-Mile Delivery Investments

New data from Convey shows that 81 percent of retailers are planning to increase investments in more complex last-mile delivery initiatives over the next 12 months.

Released Wednesday, the survey from the supply chain management company showed that 57 percent of retailers have added at least one delivery partner or carrier in the past year. The main reason they cited was meeting “customer demand for increased delivery speed” (70 percent) followed by balancing “delivery costs with customer expectations” (49 percent) and offering “innovative delivery options to remain competitive” (35 percent).

Convey also analyzed data derived from tens of millions of packages shipped from more than 500,000 locations in North America in April and found that on-time performance has stabilized and returned to pre-pandemic performance levels. Convey found 82 percent of parcel shipments were delivered on time last month, up from 77 percent in April 2020.

This is likely because volume-related network stress has decreased–no panic buying, plus brick and mortar reopening–Convey said. In addition, carriers have caught up to new processes and labor impacts are less common. However, on-time performance hasn’t quite caught up to April 2019 levels of 89 percent due to FedEx performance issues, Convey said.

UPS and the U.S. Parcel Service (USPS) were stable month-over-month, while FedEX performed significantly lower than other carriers–71 percent on-time performance (OTP) compared to 88 percent for UPS and 90 percent for USPS, with its cheapest service levels hit hardest.

“FedEx recently announced significant open positions for its Ground service, so we will continue to monitor and see if these new hires positively impact their OTP,” Convey said.

Market share stabilized, with FedEx and UPS dominating. For the past three months, UPS, FedEx, USPS and DHL have held steady in Convey’s network market share. April 2021 market share for the carriers stood at FedEx at 36 percent, UPS at 28 percent, USPS at 9 percent, DHL at 10 percent and regional carriers at 16 percent.